Rate cut to help revive growth, investment: Mukherjee

New Delhi, April 17 (IANS) The Reserve Bank of India’s (RBI) decision to cut policy rates by 0.50 percent for the first time in three years will help revive investments and economic growth, Finance Minister Pranab Mukherjee said Tuesday.

“The monetary policy announcements should help in investment revival and contribute to strengthening of business sentiment,” Mukherjee told reporters.

The RBI in its annual monetary policy for 2012-13 cut the repurchase rate by 50 basis points to 8 percent, which will automatically see the reverse repurchase rate also drop to 7 percent from 7.5 percent.

Mukherjee said the government would take additional steps in the coming weeks to revive growth.

“The growth outlook, which had weakened in past months, should now improve.”

The finance minister said moderation in the core inflation rate for four months in a row from 8.31 percent in December 2011 to 5.18 percent in March 2012 along with a sharper decline in the inflation for manufactured products from 7.64 percent to 4.87 percent in this period has facilitated the change in the monetary policy stance.

However, he admitted that a sharp jump in food and primary article inflation in March was a cause of concern.

“Food and primary inflation has shown signs of hardening. This is a cause for some concern. We intend to continuously monitor the situation and take the required steps to manage the short term supply constraint for those food items which contribute inflation,” he said.